United States v. McMullen - 222 U.S. 460 (1912)
U.S. Supreme Court
United States v. McMullen, 222 U.S. 460 (1912)
United States v. McMullen
Argued December 13, 14, 1911
Decided January 9, 1912
222 U.S. 460
Under the provisions of the contract in this case for possible extensions of time, the sureties on the bond which was part of the contract were not discharged by reason of the extensions which were granted pursuant to the contract.
Where there is a penalty for avoidable delay in performance of a government contract, sureties are not discharged because the government does not take steps against the contractor to collect the penalties.
Quaere whether, where the contractor is given a right to extension of time if the Secretary of Navy approves, the Secretary is to be regarded as a third party or as representing the United States.
Annulling a contract by the government does not mean in this case that the government rescinded or avoided it, but that it would proceed no further with the contractor and would charge him with the difference in cost caused by his default.
When the government relets a contract after default, the price for which it is relet must be assumed to be reasonable in absence of evidence to the contrary, and this is especially so when the difference is less than the sum stipulated as liquidated damages.
When the government relets a contract, the sureties are not relieved because there are differences in the terms which diminish the cost of the work as relet.
A government contract is not unenforceable for want of certainty and mutuality because it allows changes by the United States, subject to provisions for change of compensation where proper.
The amount of work to be done under a government contract depends upon the appropriations made by Congress for carrying on the work, and this is implied whether expressed in the contract or not.
Where the answer does not deny that the contract was signed by the United States and the contract declares that it is, and it is signed by the Chief of Bureau of Yards and Docks, there is admission by implication that it was signed by the United States, and is sufficient.
167 F. 460 reversed.
The facts, which involve the liability of contractors and sureties upon a contract with the United States for dredging and a bond given for completion thereof, are stated in the opinion.